A tale of two cities (and how they pay for roads)

City officials in Sitka have their fingers crossed that voters will amend the municipal charter on Tuesday, and allow them to nudge the property tax upwards to pay for road repairs and hospital infrastructure. While voters have approved at least two temporary sales tax increases in recent years, the property tax has remained solidly capped. What the electorate will do on election day is anyone’s guess. But Sitka is not alone: Other communities in Southeast also have to solve the problem of increasing maintenance costs, and declining government revenues. KCAW’s Robert Woolsey checked in with the city managers in Juneau and Petersburg to learn how these towns are coping with the same issues.

(Audio: Opening lines of A Tale of Two Cities, by Charles Dickens.)

It’s not exactly the Tale of Two Cities, but Petersburg’s acting city manager, Karl Hagerman, is awaiting the end of the Secure Rural Schools Act with about as much enthusiasm as Sydney Carton awaited the guillotine.

“We’re not looking forward to that day at all. We definitely struggle with where to find the money for our local roads.” Although Hagerman, who will by now have returned to his regular job as public works director, was not around to see it, Petersburg also benefited from large amounts of paving during Southeast’s legislative heyday in the late 80s and early 90s.

“And here we are twenty years later, and a lot of the paving that was done at that time is in need of touch up, and we still have plenty of other paving opportunities in Petersburg that have yet to be done at all. So we have a lot of need here, and not a lot of money to get it done.”

The Secure Rural Schools Act has been a boon for communities like Sitka and Petersburg. It used to be called “timber receipts.” In fact, on Sitka’s city budget the line item still reads “stumpage.” Recently it’s been just over $1-million dollars annually in Sitka, which has been split between the city government and the school district.

In Petersburg, Hagerman says they’ve used Secure Rural Schools Act money to set up a dedicated fund for road maintenance. Which helps explain why he’s unhappy that Alaska’s congressional delegation has warned recipients of the funding – which goes to communities in forests all over the west – that renewal of the Act likely will not be included in the 2012 budget. That, says Hagerman, leaves Petersburg in a familiar bind.

“The millage rate in Petersburg is capped at 10, so every proposal to increase that has to be approved by voters, much like what is going on in Sitka right now. I don’t have a lot of hope that something like that would fly with our local electorate, either. But something needs to happen sometime in the future. We definitely have a need pretty soon to make sure that we don’t fall short once that Secure Rural Schools funding goes away.”

“We currently have a 5-percent sales tax, and we will allocate one percent of that – about $8-milllion a year – to maintaining or improving our streets, sidewalks, and stairways.”

If this news story truly were a Dickens novel, Swope wouldn’t be anywhere near a guillotine. He’d be carving the prize turkey at the Cratchit’s home on Christmas Eve.

“Yes, I think we’re doing pretty well with this approach.”

The $8-million of its sales tax that Juneau spends on road maintenance is what Sitka generates in sales tax, period. Juneau’s population is over three times greater than Sitka, and it gets about four times as many cruise ship visitors. This may explain why it’s so far ahead in sales tax revenue.

But Swope cautions that roads alone are a tough sell for taxes. The road money has to be bundled with more high-profile expenses.

“I don’t know how it would fare if it were a separate sales tax initiative only for roads and sidewalks. But I think what’s critical here is that it’s been included with an additional 2-percent for police and fire, and basic and critical public service operations.”

Together, police, fire, and roads take up three percent of Juneau’s five percent sales tax. Voters reauthorize the package every few years. Swope says that – so far – they’ve been more than willing to do so.

So where does that leave Sitka on Tuesday? Raising the property tax cap by a half-mil will generate roughly $500,000 – enough to offset the city’s loss of Secure Rural Schools funding, which would be a nice short term fix if we were Petersburg, but far short of the actual cost of maintaining an urban environment anything on a par with Juneau.

Sitka’s administrator Jim Dinley has asked for a place to start. Voters on Tuesday will decide whether or not to give him one.